AMERICAN COLLEGE OF TECHNOLOGY

INTERNATIONAL MARKETING ASSIGNMENT

Group members

1. Addishiwot Abera

2. Arsema Fisseha

3. Bamlak Seyoum

4. Edlawit Mekonen

5. Efrata Kassahun

6. Hanan Nuredin

7. Hamelmal tilahun

8. Kebron Mersha

9. Yeabsira Adirse

Submitted to- Mr. Manaye

Submission date- Nov. 10,

2023
 1. The difference between absolute advantage theory and comparative
advantage theory of international marketing?

Absolute advantage theory and comparative advantage theory are two important theories in
economics developed by Adam Smith (father of economics). They explain how the limited
resources of a particular nation can be used to produce goods and services. These theories mainly
deals with the decision of how a particular nation can get advantages over their unique
production fortes in international trade.

Absolute advantage and comparative advantage theories are concepts that relate to international
trade and economics. These economic policies can help determine how countries, companies or
businesses choose to manufacture and trade for products. These two concepts influence decisions
made by entities to commit natural resources and labor to produce specific goods.

Similarities between absolute advantage theory and comparative advantage theories

Both theories deal with production of goods and services between two or more nations

Difference between absolute advantage theory and comparative advantage theories

 Absolute Advantage theory describes the ability of a specific country to produce goods
at a lower cost per unit whereas comparative advantage theory describes the ability of a
specific country to produce goods at a lower opportunity cost. Opportunity costs involve
the benefits mainly profits that an entity loses when choosing one option over another.
 Absolute advantage theory evaluates how efficiently a single product can be produced
for quality, quantity and profit whereas comparative advantage theory helps an entity
select between several products to determine which has the greater return.

We can see the difference between absolute and comparative advantages theory more by
classifying it in to trade, production and economic effectiveness and focus.

 Trading

Absolute Advantage: Trading is not mutually beneficial for two countries.

Comparative Advantage: Trading is mutually beneficial for two countries.

  Production and economic effectives

Absolute Advantage: A country with absolute advantage produces a higher volume of goods
with the given amount of resources without accounting for the possibility of cost reduction.

Comparative Advantage: A country with comparative advantage produces goods better than
another nation with the same amount of resources and also encourages resource reallocation and
import-export relationships between entities, improving the monetary return of all entities
involved.

 Focus

Absolute Advantage: Absolute advantage considers advantage of producing numerous goods.

Comparative Advantage: Comparative advantage considers overall production of a nation

during a given period.

2. The opportunities and challenges of international marketing

3. The barrier to the international trade of international marketing with the
example